My last post here, "How to Work with Your Vendors to Go on a Packaging Diet," was born of the frustration my colleagues and I felt from dealing with the wasteful and at-times absurd amount of packaging our IT products are shipped in. In it, I challenged ITC suppliers to reduce packaging, and since that time, I have found a perfect case study proving the benefits of going on a "packaging diet."
I visited with several members of Cisco's supply chain team working toward a comprehensive Sustainable Value Chain strategy. Overseen by Edna Conway, the company's Senior Director of Advanced Compliance and Social Responsibility, Cisco's environmentally sound packaging program is still evolving and not fully rolled out, but early results show what is possible.
Small Changes, Big Results
The savings that Cisco is seeing from its packaging diet are sensational, to say the least: The pilot program alone would lead to $24 million in annual savings. And by focusing on packaging material content, volume and transport container efficiency, the company will save on materials and transportation costs as well.
One product line reduced packaging by 33 percent and increased transportation load utilization by 50 percent resulting in $1.3 million annual savings. The most dramatic improvement for a product was 450 percent increase in transportation efficiency with savings of $1.8 million. Cisco's efforts provide the necessary business case for other ITC providers to green their packaging.
More than 4 million pounds of materials were eliminated across the pilot products. In addition, progress was made to increase recycling potential. From an environmental perspective, greener packaging resulted in decreased energy and water use while reducing GHGs related to transport.
Transportation costs were a major contributor to costs since Cisco supports global manufacturing and a global customer base. Much of the product is shipped at some part of its journey via air which is the most expensive transport method, both financially and environmentally. As reported by the Environmental Protection Agency (EPA), shipping by air compared to ship creates nearly 20 times as much GHG for the same ton-mile shipped.
Cisco selected high volume products from its wide range of product families to participate in the pilot program, and the chart below lays out the savings Cisco will earn from the project.
When trying to digest the millions saved, I noticed that for each pound of packaging material that Cisco reduced, more than $5 of annual savings was achieved for those products participating in the pilot. The type of materials, weight, volume and transportation methods could change how many dollars are saved per pound.
A "per pound saved" metric is simple to conceptualize. Most of us are able to imagine removing at least one pound of materials and thus provides a good starting point for brainstorming new packaging design. It is also a helpful metric when comparing savings across product lines.
Three Guidelines for a Packaging Diet
Cisco's new packaging practices are compared to the three best practices reviewed in my previous post: Eliminate, right-size and sustain.
Paper-based documentation was digitized and migrated to CDs or "pointer cards" -- 3 x 5 inch cards with online references. The intention is to use pointer cards whenever documentation is not mandated by regulation. As you can see in the image below, Cisco's IP phone benefited from documentation reduction. Now three phones can be shipped in the same space that previously could only support two units -- a 50 percent improvement.
Cisco also looked for activities that could be eliminated. For example, with its CSR product, the old method was to depopulate and package cards after testing. By leaving the cards in the rack, Cisco was able to eliminate an entire crate. Cisco also reduced labor by no longer removing and packing the cards.
Although cushioning is still required, Cisco took a solid piece of cushioning and reduced the materials used without any performance degradation.
Cisco also eliminated a plastic bag type that could not be recycled and replaced it with a thinner and recyclable bag.